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First-time buyers 'held back by deposits'

By Jonathan Dawes, Fri 19 Mar 2010 - Published in Mortgages

The current size of the deposits is preventing many first-time buyers from getting onto the property ladder, it has been suggested.

Recent research from the National Housing Federation found that 86 per cent of 18 to 30-year-olds could not afford to buy their first home, even though property prices have started to fall.

Bernard Clarke, communications manager for the Council of Mortgage Lenders, said the issue is being created by the amount of money which people need to put upfront for a home.

"The major problem for first-time buyers is the size of the deposit that they have to come up with - on average now, that's 25 per cent of the cost of the property," he explained.

In addition, the National Housing Federation survey found 54 per cent of young people would need help from their relatives if they wanted to buy a home, with nine per cent having to lend £40,000 or more.

Mr Clarke added that this option could become rarer in the future, as many older relatives are unable to draw on the equity they would have used in the past because their own property has declined in value.